The U.S. Small Business Administration has released a single-page form that aims to simplify the process of applying for the forgiveness of Paycheck Protection Program loans, together with updated and revised forms to meet the requirements of the latest stimulus legislation.
The COVID-19 aid package Congress approved last month renewed the PPP with $284 billion of funds for small businesses that want forgiveness loans to help them deal with the financial fallout from the coronavirus outbreak. It also included a requirement that the SBA to issue streamlined forms within 24 hours of the bill being adopted to make the application process for forgiveness. It also included conditions designed to facilitate more loans from community banks, specifically for minority-owned businesses who struggled to get loans last year.
“The Small Business Administration met the requirement to issue the one-page form for the forgiveness of PPP loans by 24 days after the date of enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars, a partner with Thomas, Zollars & Lynch CPAs, on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also published new forms that were updated.”
First Draw PPP Loan forgiveness terms
Student Loan Forgiveness For Bipolar Disorder – First Draw PPP loans granted to borrowers who meet the criteria are eligible for full loan forgiveness if within the 8 to 24 week period that follows loan disbursement:
- It’s the same for compensation and employees.
- The proceeds of the loan can be used to pay for expenses for payroll or other eligible expenses.
- At least 60% of profits go towards expenses for payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans for eligible borrowers are qualified for loan forgiveness when the loan is paid within an 8– 24-week period.
- The First Draw PPP loan requires that the compensation and employee levels be maintained in the exactly the same manner.
- The loan funds are used on payroll costs as well as other eligible expenses and
- A minimum of 60% of the proceeds are used to pay for payroll expenses
- How to apply for loan forgiveness and when to apply
A borrower can apply for forgiveness once the loan’s proceeds for which the borrower wants forgiveness have been utilized. Borrowers may apply for forgiveness at any point up to the loan’s maturity date. If they do not file for forgiveness within 10 months of the last day of the period covered and the loan is not renewed, PPP loans are not deferred any longer, and borrowers will begin making monthly payments to their PPP lender.